How to Report “Receipts Not in the Nature of Income” in ITR?
Three possible interpretations until CBDT issues a clarification.
Introduction
One of the major changes introduced in the Income Tax Return (ITR) utility for AY 2026-27 is a new reporting field titled “Receipts not in the nature of income.” While the field appears simple, the CBDT has not yet issued any detailed clarification explaining what exactly should be reported. Consequently, professionals have interpreted this disclosure requirement differently.
This article discusses the three possible interpretations, the reasoning behind each, my professional opinion, and finally provides a practical guide that any taxpayer can follow.
If you are here after watching my Instagram reel, you may remember that I had earlier stated that loan receipts should also be reported. At that point, my opinion was based on the widest interpretation (Point of View 3). After studying the issue more deeply and analysing the wording of the return, I now believe it is better to adopt a more conservative and legally certain position. Accordingly, my current recommendation is Point of View 1, explained below.
Why is there confusion?
The utility merely says “Receipts not in the nature of income.” It does not mention bank credits, loans, source of investments or capital formation. Therefore, different interpretations are possible.
The Three Interpretations
Report only those receipts which are not income and permanently become part of the taxpayer’s capital or wealth. This interpretation follows the wording of the return literally and requires no assumptions about the Department’s intention.
- Gift received from parents or relatives exempt under the Act.
- Sale proceeds of rural agricultural land not chargeable to tax.
- Inheritance received.
- Capital receipts that permanently belong to the taxpayer.
Report all receipts covered in Point of View 1 along with receipts that become the source of asset creation, such as long-term loans and security deposits. The reasoning is that future investments can be explained using this disclosure.
- Housing loan
- Loan from relatives
- Security deposit received
Report almost every receipt appearing in the bank or cash book except pure pass-through items like reimbursements or client money. This approach seeks maximum disclosure and reconciliation of bank credits.
- Short-term bank loans
- Working capital loans
- Loan against FD
- Temporary borrowings
My Professional Opinion
In my opinion, Point of View 1 is the only interpretation that is unquestionably correct because it directly follows the language used in the return. It reports receipts that are genuinely not income and permanently increase the taxpayer’s capital.
Point of View 2 and Point of View 3 may also eventually turn out to be correct if the CBDT clarifies that the objective is wider. However, until such clarification is issued, they remain interpretations rather than settled law.
What if the Department later adopts Point 2 or Point 3?
Even if the Department later expects wider reporting, taxpayers can always explain loans or other temporary receipts using documentary evidence such as loan agreements, sanction letters, confirmations, bank statements and repayment records. Taxpayers have always explained such receipts whenever required, even before this reporting field existed.
How to Apply Point of View 1
A simple step-by-step guide:
Did you receive any receipts during the year?
Is that receipt taxable as income? If yes, report it under the relevant head of income — not here.
If it is not income, ask whether you permanently retain it as your own capital or wealth. If yes, report it here. If it is merely a temporary borrowing or refundable amount, do not report it under Point of View 1.
Illustrative Decision Table
| Receipt | Report under POV 1? | Reason |
|---|---|---|
| Gift from father | ✔ Yes | Permanent capital receipt |
| Inheritance | ✔ Yes | Not income |
| Sale of rural agricultural land | ✔ Yes | Capital receipt |
| Housing loan | ✖ No | Repayable borrowing |
| Vehicle loan | ✖ No | Temporary liability |
| Security deposit received | ✖ No | Refundable liability |
| Expense reimbursement | ✖ No | Pass-through receipt |
| Money collected for client | ✖ No | Not your own receipt |
Conclusion
Until the CBDT issues a detailed clarification, there are three reasonable interpretations. My recommendation is to adopt Point of View 1 because it is directly supported by the wording of the return and is legally the most certain. If the Department later adopts a broader interpretation, taxpayers can still explain additional receipts through proper documentation.
This article is based on the provisions of the Income-tax Act, 1961 and the ITR utilities available for AY 2026-27 as on the date of publication. Since the disclosure field is newly introduced, future CBDT FAQs or instructions may clarify or modify its intended scope. This article is for educational purposes only, and the author does not take responsibility for any actions taken on its basis. In case of any lack of clarity, it is always better to take a professional opinion before proceeding. If you need the help of our team at Bhadani & Alliance, we are always present to support you — reach us through the contact us page.
How to Report “Receipts Not in the Nature of Income” in ITR?
Three possible interpretations until CBDT issues a clarification.
Introduction
One of the major changes introduced in the Income Tax Return (ITR) utility for AY 2026-27 is a new reporting field titled “Receipts not in the nature of income.” While the field appears simple, the CBDT has not yet issued any detailed clarification explaining what exactly should be reported. Consequently, professionals have interpreted this disclosure requirement differently.
This article discusses the three possible interpretations, the reasoning behind each, my professional opinion, and finally provides a practical guide that any taxpayer can follow.
If you are here after watching my Instagram reel, you may remember that I had earlier stated that loan receipts should also be reported. At that point, my opinion was based on the widest interpretation (Point of View 3). After studying the issue more deeply and analysing the wording of the return, I now believe it is better to adopt a more conservative and legally certain position. Accordingly, my current recommendation is Point of View 1, explained below.
Why is there confusion?
The utility merely says “Receipts not in the nature of income.” It does not mention bank credits, loans, source of investments or capital formation. Therefore, different interpretations are possible.
The Three Interpretations
Report only those receipts which are not income and permanently become part of the taxpayer’s capital or wealth. This interpretation follows the wording of the return literally and requires no assumptions about the Department’s intention.
- Gift received from parents or relatives exempt under the Act.
- Sale proceeds of rural agricultural land not chargeable to tax.
- Inheritance received.
- Capital receipts that permanently belong to the taxpayer.
Report all receipts covered in Point of View 1 along with receipts that become the source of asset creation, such as long-term loans and security deposits. The reasoning is that future investments can be explained using this disclosure.
- Housing loan
- Loan from relatives
- Security deposit received
Report almost every receipt appearing in the bank or cash book except pure pass-through items like reimbursements or client money. This approach seeks maximum disclosure and reconciliation of bank credits.
- Short-term bank loans
- Working capital loans
- Loan against FD
- Temporary borrowings
My Professional Opinion
In my opinion, Point of View 1 is the only interpretation that is unquestionably correct because it directly follows the language used in the return. It reports receipts that are genuinely not income and permanently increase the taxpayer’s capital.
Point of View 2 and Point of View 3 may also eventually turn out to be correct if the CBDT clarifies that the objective is wider. However, until such clarification is issued, they remain interpretations rather than settled law.
What if the Department later adopts Point 2 or Point 3?
Even if the Department later expects wider reporting, taxpayers can always explain loans or other temporary receipts using documentary evidence such as loan agreements, sanction letters, confirmations, bank statements and repayment records. Taxpayers have always explained such receipts whenever required, even before this reporting field existed.
How to Apply Point of View 1
A simple step-by-step guide:
Did you receive any receipts during the year?
Is that receipt taxable as income? If yes, report it under the relevant head of income — not here.
If it is not income, ask whether you permanently retain it as your own capital or wealth. If yes, report it here. If it is merely a temporary borrowing or refundable amount, do not report it under Point of View 1.
Illustrative Decision Table
| Receipt | Report under POV 1? | Reason |
|---|---|---|
| Gift from father | ✔ Yes | Permanent capital receipt |
| Inheritance | ✔ Yes | Not income |
| Sale of rural agricultural land | ✔ Yes | Capital receipt |
| Housing loan | ✖ No | Repayable borrowing |
| Vehicle loan | ✖ No | Temporary liability |
| Security deposit received | ✖ No | Refundable liability |
| Expense reimbursement | ✖ No | Pass-through receipt |
| Money collected for client | ✖ No | Not your own receipt |
Conclusion
Until the CBDT issues a detailed clarification, there are three reasonable interpretations. My recommendation is to adopt Point of View 1 because it is directly supported by the wording of the return and is legally the most certain. If the Department later adopts a broader interpretation, taxpayers can still explain additional receipts through proper documentation.
This article is based on the provisions of the Income-tax Act, 1961 and the ITR utilities available for AY 2026-27 as on the date of publication. Since the disclosure field is newly introduced, future CBDT FAQs or instructions may clarify or modify its intended scope. This article is for educational purposes only, and the author does not take responsibility for any actions taken on its basis. In case of any lack of clarity, it is always better to take a professional opinion before proceeding. If you need the help of our team at Bhadani & Alliance, we are always present to support you — reach us through the contact us page.